U.S. Bankruptcy Courts - Judicial Business 2013

 Bankruptcy petitions may be filed under one of six chapters of the Bankruptcy Code. Most consumer (i.e., nonbusiness) petitions, which constituted 97 percent of all petitions in 2013, are filed under chapter 7, through which non-exempt assets are liquidated and proceeds distributed to creditors, or under chapter 13, through which debtors with regular income retain assets and obtain court-confirmed plans to pay off their creditors over a period of up to five years. Under both chapters, debtors may receive a discharge of eligible debt on completion of a bankruptcy. Most business petitions are filed under chapter 7, through which businesses cease operations and liquidate assets, or under chapter 11, through which businesses reorganize and continue operating. The three remaining chapters of the Bankruptcy Code—chapter 9 (which covers local governments and instrumentalities), chapter 12 (which covers family farmers and fishermen), and chapter 15 (which applies to foreign corporations or individuals)—collectively accounted for only 489 filings in 2013, less than one-tenth of 1 percent of all petitions filed.

Filings under chapter 7 fell 14 percent in 2013 and accounted for 68 percent of all filings, down from 69 percent in 2012 and 71 percent in 2011. Nonbusiness chapter 7 petitions also decreased 14 percent and amounted to 68 percent of all nonbusiness filings, down from 69 percent in 2012. Business chapter 7 petitions dropped 19 percent and accounted for 67 percent of all business filings, down from 69 percent in 2012.

Filings under chapter 13 decreased 8 percent to 343,651. These petitions equaled 31 percent of all filings, up from 30 percent in 2012 and 28 percent in 2011. Nonbusiness chapter 13 petitions fell 8 percent and amounted to 32 percent of all nonbusiness petitions, up from 31 percent in 2012. Chapter 13 petitions filed by individuals with predominantly business debts fell 16 percent to 2,844 and constituted 8 percent of all business filings, the same as 2012.

Chapter 11 filings declined 10 percent to 9,564. Chapter 11 cases, which typically require significantly more court resources than cases filed under chapters 7 and 13, accounted for 1 percent of all filings, the same as in 2012. The 8,158 business chapter 11 petitions filed in 2013 constituted 23 percent of all business filings, up from 22 percent in 2012.

Although bankruptcy filings decreased nationwide, and all 12 circuits reported fewer filings for the third consecutive year, the rates of decline varied significantly in different regions. Districts constituting the Ninth Circuit in the western United States had a combined 22 percent decline in filings, whereas the districts in the Seventh Circuit (in the states of Illinois, Indiana, and Wisconsin) had a combined 5 percent reduction.

The Federal Judiciary has 90 bankruptcy courts, one in each judicial district except for the Districts of Guam, the Northern Marianas Islands, and the U.S. Virgin Islands (where the bankruptcy court is a division of the district court), and the Eastern and Western Districts of Arkansas (which share one bankruptcy court). Eighty-six of the 90 courts received fewer filings in 2013 than in the previous year. Four courts had increased filings–the District of Puerto Rico (up 3 percent); the Southern District of Mississippi (up 2 percent); the Southern District of Illinois (up 2 percent); and the Middle District of Alabama (up less than 1 percent), which saw its filings grow for the second consecutive year.

The greatest percentage declines occurred in the Central District of California and the District of Massachusetts, which both had 26 percent fewer filings than in 2012. Seven additional districts reported decreases of 20 percent or more; six are in the Ninth Circuit–the District of Nevada, the Southern District of California, the Northern District of California, the District of Alaska, the Eastern District of California and the District of Arizona–and the other is the District of New Hampshire.

Terminations of bankruptcy cases fell 8 percent this year to 1,197,918. Because terminations exceeded filings, the total of 1,534,652 cases pending on September 30, 2013 was six percent below the total pending one year earlier.

The complex relationship between bankruptcy filings and other economic factors–including unemployment, foreclosures, and consumer confidence–means that the continuing decline in bankruptcy filings does not necessarily indicate broader economic well-being. Filings may rise when consumers and businesses with increased access to credit and greater confidence about their economic prospects (generally considered positive economic developments) overextend themselves financially; filings also may rise when unemployment increases or debtors seek to forestall foreclosures (generally considered negative economic developments). Conversely, filings may fall in response to lack of access to credit, lower consumer confidence, lower unemployment, or fewer foreclosures. Therefore, interpreting a decline in bankruptcy filings as either a positive or negative economic indicator is problematic.

Data are for the 12-month periods ending September 30, 2012 and 2013. Data for an individual district may be viewed by mousing over that district.

Adversary Proceedings

Adversary proceedings are separate civil lawsuits that arise in bankruptcy cases, including actions to object to or revoke discharges, to obtain injunctions or other equitable relief, and to determine the dischargeability of debt. Adversary proceedings may be associated with consumer bankruptcy cases, but most arise in cases filed under chapter 11. They generally reflect the level of chapter 11 bankruptcy petitions filed two years earlier.

In 2013, filings of adversary proceedings fell 17 percent to 44,555 (down 9,376 proceedings). This was 20 percent below the total for 2009. Eighty-three districts reported lower filings; 46 districts had declines of 20 percent or more, and 4 had reductions of 50 percent or more. The largest numeric decrease occurred in the Eastern District of Michigan, where filings fell by 811 proceedings (down 26 percent); that district previously had received a large number of filings related to "mega cases" (i.e., bankruptcy cases involving at least $100 million in assets and 1,000 creditors). The largest percentage reduction occurred in the District of New Mexico, where filings dropped 68 percent (down 257 proceedings); that district previously had received many filings related to chapter 11 cases nearing the deadline for filing a recovery action, which is a type of adversary proceeding.

Filings grew in 10 districts. The largest growth was in the District of Delaware, where filings rose 72 percent (up 1,185 proceedings), with most arising from cases involving WP Steel Ventures, New Page Corporation, and Conex Holdings. The Northern District of Oklahoma was the only district where filings remained unchanged (87 proceedings).

Terminations of adversary proceedings declined 20 percent to 53,512. Pending adversary proceedings dropped 13 percent to 56,843.

Data on adversary proceedings in the bankruptcy courts can be found in Table F-8.